How many people own their home? And of those homeowners, how many people still owe? Statistics show that in 1950, more than half of all Americans owned their home free and clear. Nowadays, this number is roughly 33%. It’s an instinctive feeling to pay off your debt as soon as possible, but is it worth it in the end? There are different kinds of debt and there are different kinds of answers to that question.
For those who consider debt consolidation to be a priority, the answer is “yes.” A Chicago family paid off its $110,000 mortgage in thirteen years by sticking to two rules:
- Don’t buy things you can’t afford.
- Live below your means (even if it is just a little).
The family took extra steps to be mortgage-free by spending only a little more than the bare minimum. Playing the devil’s advocate on this, I wondered what they sacrificed. As it turned out, the family rarely went out to eat or took lavish vacations, and the two kids couldn’t participate in any extracurricular activities such as music lessons.
With so many cutbacks in life, sometimes you wonder if being debt-free is really worth neglecting family time that requires a little splurging. Being around a family that always saves can put you in that same frugal mindset. In my “Tips for being Debt-Free” blog, I’ve given advice for getting out of credit card debt. While these tips can apply to any debt, the “good” thing about mortgages or student loans is that that they can benefit you during tax season. The money spent retaining that mortgage can increase your refund, which in turn frees up funds for everyday purchase. Those without a mortgage will have less to deduct. So I ask again, “Is it worth it?”